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How Globalization Destroyed the Western Middle Class

Published: September 15, 2020
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The world is becoming more equal but largely at the expense of middle-class Westerners, according to a recent paper by Branko Milanovic, a Stone Center Senior Scholar and a Centennial Professor at the London School of Economics. Milanovic’s paper was published in Foreign Affairs, the publication of the think tank, the Council on Foreign Relations (CFR), and was titled: The World Is Becoming More Equal, Even as Globalization Hurts Middle-Class Westerners. Broadly speaking, globalization is the process of increased “worldwide integration of the economic, cultural, political, religious, and social systems” of the globe, producing an increased flow of goods, capital, labour, and information, across national borders. It was a process that gained steam particularly in the mid-1980s, with globalization having the greatest transformative impact on life since the Industrial Revolution.  

Milanovic’s paper starts by arguing that the world became more equal between the end of the Cold War and 2007/08 financial crisis, a period of high globalization. During this period however, globalization weakened the middle class in the West. As Milanovic writes:

“The results highlighted two important cleavages [or divisions]: one between middle-class Asians and middle-class Westerners and one between middle-class Westerners and their richer compatriots. In both comparisons, the Western middle class was on the losing end. Middle-class Westerners saw less income growth than (comparatively poorer) Asians, providing further evidence of one of the defining dynamics of globalization: in the last 40 years, many jobs in Europe and North America were either outsourced to Asia or eliminated as a result of competition with Chinese industries. This was the first tension of globalization: Asian growth seems to take place on the backs of the Western middle class.”

Milanovic continues:

“Another chasm opened between middle-class Westerners and their wealthy compatriots. Here, too, the middle class lost ground. It seemed that the wealthiest people in rich countries and almost everybody in Asia benefited from globalization, while only the middle class of the rich world lost out in relative terms. These facts supported the notion that the rise of “populist” political parties and leaders in the West stemmed from middle-class disenchantment.”

Milanovic goes on to note that in an updated paper that looks at incomes in 130 countries from 2008 to 2013-14, the first tension of globalization holds true: in that, the incomes of the non-Western middle class grew more than the incomes of the middle class in the West. The impact of globalization on the Western middle class is imperative to understand. Globalization is a process that has produced winners and losers, and the Western middle class has been the greatest loser.

In my opinion, any system that weakens the middle class in any country should be seen as counterproductive. Having a strong middle class is one of the most important tenets in building a strong, prosperous, and stable society. The middle class serves as the bedrock of any country: those who comprise the middle-class work hard, pay taxes, and buy goods. A true solution to poverty in underdeveloped countries would create more prosperity for everyone, not take prosperity from one region and redirect it into another. This so-called solution creates at least as many problems as it supposedly solves.

Globalization has produced, and will seemingly continue to produce, a global standardization of wealth in many ways. For those special interests who are in the process of creating a global system, an economic uniformity across the globe is advantageous for the creation of this one-world system.

Sources

Globalization Definition, Oxford Reference - https://www.oxfordreference.com/view/10.1093/oi/authority.20110803095855259

MÜNCHAU, W. (24 April, 2016) The revenge of globalisation’s losers, Financial Times https://www.ft.com/content/a4bfb89a-0885-11e6-a623-b84d06a39ec2

Milanovic, B. (28 Aug. 2020) The World Is Becoming More Equal, Even as Globalization Hurts Middle-Class Westerners. Foreign Affairs https://www.foreignaffairs.com/articles/world/2020-08-28/world-economic-inequality

Milanovic, B. (13 May, 2016) Why the Global 1% and the Asian Middle Class Have Gained the Most from Globalization, Harvard Business Review https://hbr.org/2016/05/why-the-global-1-and-the-asian-middle-class-have-gained-the-most-from-globalization

Vanham, P. (17 Jan. 2019) A brief history of globalization, World Economic Forum https://www.weforum.org/agenda/2019/01/how-globalization-4-0-fits-into-the-history-of-globalization/

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